Wednesday, December 21, 2005

Minimum Wage

I was thinking of creating a minimum wage job. I was thinking about hiring someone to maintain the calendar on my community sites. My plan was to create the position early next year (after upgrading the server). The job would really be more of community service type job than a career. The calendar updater would interface with all of the charitable organizations in town to make sure all of the non-profit, fundraiser events, etc., were listed.

I think the job would be ideal for a mom with toddlers, a senior who wants to stay active or a student who is intensely interested in the community. This soft job would take just a few hours a month and would have zero pretense about being a career.

This job really is only tenable at a low wage.

Anyway, the paper says that a Utah politician, Ed Maynes, wants to raise the minimum wage from $5.15 to $7.00. I am upset, my hope for creating this soft job is now untenable. There goes another hope.

BTW, I wish contemptable little snits like Ed Maynes would look at economic data before making their little iconoclastic stands. According to the BLS, wages have been increasing at a nice steady pace (chart). Raising the minimum wage would be a non-issue for most because they are above $7.00. There might be a burst of wage inflation. The main thing the legislation does is eliminate all of the soft-jobs ... like calendar updater. Historically, raising the minimum wage has done little except increase unemployment.

What a low minimum wage does is creates the opening for soft jobs ... like the calendar updating position. Raising the minimum wage will wipe out a large number of those silly little marginal scrapbooking jobs and other little initiatives that Utah seems to produce in abundance.

The calendar updating position is barely workable at 5.15 an hour. It is impossible at $7. I know, I could outsource the job to India. However, my sites are about the local community. Companies like call centers will have better luck outsourcing jobs ... that is until our politicians have successfully marginalized our nation to the point where our per capita income is on par with India.

BTW, We have a horrible problem in the United States. The price of rent and items based on scarce resources (such as food) has been going up.

For example, in places like Salt Lake City -- where the zoning regulations are so tight that the number of new rental units has not kept pace with the growth in population, rent is out of reach of many families.

This problem is 100% the result of the tight zoning regulations. Salt Lake City proper has regulated people out of the city. Most houses in Salt Lake are zoned single family residentional. Only a few politically connected people are able to convert their property into duplexes, or fourplexes. If it were not for the aggressive zoning, we would see city streets lined with housing units stack four stories high (as was the common pattern in cities before the tight zoning regulations of the 60s and 70s.) Instead, the city is filled with aging single family housing on land that is too expensive for people to afford.

The population of Salt Lake City proper has shrunk in the last several decades ... Our politicians have created a climate that is so hostile to landowners that the amount of housing in the city has shrunk. The result is rents that are beyond the means of large segments of our population. If it were legal for property owners to develop their land, we wouldn't have this absurd rental market.

There has been substantial tax inflation. The amount of money that each Utah must pay in property taxes has well outstripped increases in wages.

It is possible that a spat of wage inflation might help counter some of the problems with the rent inflation caused by zoning. Though I doubt. Politician created inflation generally just creates a stagnant economy where wages chase their tail.

What I think we should do is get the government out of setting wages. Instead we should have a published indexed called a livable wage based on prices in a region. The livable wage would end up serving as a stigma. Companies might have jobs paying under the livable wage ... however, it would not stop the creation of margin jobs like calendar updater, or old person visitor, or street picker upper and all of the non-jobs that do not exist because of a high minimum wage.

Despite the fact that minimum wage has not been adjusted by the government, there has been a steady rise in wages and income reported by the BLS. The main result of raising the minimum is either inflation or a reduced number of jobs. My fear is that, with technology and outsourcing, Ed Mayne's minimum wage increase will result in a loss of jobs.